AN ACT RELATING TO PUBLIC OFFICERS AND EMPLOYEES -- RETIREMENT SYSTEM -- CONTRIBUTIONS AND BENEFITS (Provides that retirees in the state pension system receive cost of living adjustments compounded into the retiree’s total retirement benefits each year beginning January 1, 2026. This act would be prospective only.)

H8147

2026 -- H 8147
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LC005039
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
____________
A N A C T
RELATING TO PUBLIC OFFICERS AND EMPLOYEES -- RETIREMENT SYSTEM --
CONTRIBUTIONS AND BENEFITS

Introduced By:
Representatives Serpa, Fellela, Cotter, Messier, Shallcross Smith,
O'Brien, Azzinaro, Kennedy, Costantino, and Corvese

Date Introduced:
February 27, 2026

Referred To:
House Finance
It is enacted by the General Assembly as follows:
1
SECTION 1. Section 36-10-35 of the General Laws in Chapter 36-10 entitled "Retirement
2
System — Contributions and Benefits" is hereby amended to read as follows:
3

36-10-35. Additional benefits payable to retired employees.
4
(a) All state employees and all beneficiaries of state employees receiving any service
5
retirement or ordinary or accidental disability retirement allowance pursuant to the provisions of
6
this title on or before December 31, 1967, shall receive a cost of living retirement adjustment equal
7
to one and one-half percent (1.5%) per year of the original retirement allowance, not compounded,
8
for each calendar year the retirement allowance has been in effect. For the purposes of computation,
9
credit shall be given for a full calendar year regardless of the effective date of the retirement
10
allowance. This cost of living adjustment shall be added to the amount of the retirement allowance
11
as of January 1, 1968, and an additional one and one-half percent (1.5%) shall be added to the
12
original retirement allowance in each succeeding year during the month of January, and provided
13
further, that this additional cost of living increase shall be three percent (3%) for the year beginning
14
January 1, 1971, and each year thereafter, through December 31, 1980. Notwithstanding any of the
15
above provisions, no employee receiving any service retirement allowance pursuant to the
16
provisions of this title on or before December 31, 1967, or the employee’s beneficiary, shall receive
17
any additional benefit hereunder in an amount less than two hundred dollars ($200) per year over
18
the service retirement allowance where the employee retired prior to January 1, 1958.

1
(b) All state employees and all beneficiaries of state employees retired on or after January
2
1, 1968, who are receiving any service retirement or ordinary or accidental disability retirement
3
allowance pursuant to the provisions of this title shall, on the first day of January next following
4
the third anniversary date of the retirement, receive a cost of living retirement adjustment, in
5
addition to their retirement allowance, in an amount equal to three percent (3%) of the original
6
retirement allowance. In each succeeding year thereafter through December 31, 1980, during the
7
month of January, the retirement allowance shall be increased an additional three percent (3%) of
8
the original retirement allowance, not compounded, to be continued during the lifetime of the
9
employee or beneficiary. For the purposes of computation, credit shall be given for a full calendar
10
year regardless of the effective date of the service retirement allowance.
11
(c)(1) Beginning on January 1, 1981, for all state employees and beneficiaries of the state
12
employees receiving any service retirement and all state employees, and all beneficiaries of state
13
employees, who have completed at least ten (10) years of contributory service on or before July 1,
14
2005, pursuant to the provisions of this chapter, and for all state employees, and all beneficiaries
15
of state employees who receive a disability retirement allowance pursuant to §§ 36-10-12 — 36-
16
10-15, the cost of living adjustment shall be computed and paid at the rate of three percent (3%) of
17
the original retirement allowance or the retirement allowance as computed in accordance with §
18
36-10-35.1, compounded annually from the year for which the cost of living adjustment was
19
determined to be payable by the retirement board pursuant to the provisions of subsection (a) or (b)
20
of this section. Such cost of living adjustments are available to members who retire before October
21
1, 2009, or are eligible to retire as of September 30, 2009.
22
(2) The provisions of this subsection shall be deemed to apply prospectively only and no
23
retroactive payment shall be made.
24
(3) The retirement allowance of all state employees and all beneficiaries of state employees
25
who have not completed at least ten (10) years of contributory service on or before July 1, 2005, or
26
were not eligible to retire as of September 30, 2009, shall, on the month following the third
27
anniversary date of retirement, and on the month following the anniversary date of each succeeding
28
year be adjusted and computed by multiplying the retirement allowance by three percent (3%) or
29
the percentage of increase in the Consumer Price Index for All Urban Consumers (CPI-U) as
30
published by the United States Department of Labor Statistics determined as of September 30 of
31
the prior calendar year, whichever is less; the cost of living adjustment shall be compounded
32
annually from the year for which the cost of living adjustment was determined payable by the
33
retirement board; provided, that no adjustment shall cause any retirement allowance to be decreased
34
from the retirement allowance provided immediately before such adjustment.

LC005039 - Page 2 of 18
1
(d) For state employees not eligible to retire in accordance with this chapter as of
2
September 30, 2009, and not eligible upon passage of this article, and for their beneficiaries, the
3
cost of living adjustment described in subsection (c)(3) of this section shall only apply to the first
4
thirty-five thousand dollars ($35,000) of retirement allowance, indexed annually, and shall
5
commence upon the third (3rd) anniversary of the date of retirement or when the retiree reaches
6
age sixty-five (65), whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase
7
annually by the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-
8
U) as published by the United States Department of Labor Statistics determined as of September
9
30 of the prior calendar year or three percent (3%), whichever is less. The first thirty-five thousand
10
dollars ($35,000) of retirement allowance, as indexed, shall be multiplied by the percentage of
11
increase in the Consumer Price Index for All Urban Consumers (CPI-U) as published by the United
12
States Department of Labor Statistics determined as of September 30 of the prior calendar year or
13
three percent (3%), whichever is less, on the month following the anniversary date of each
14
succeeding year. For state employees eligible to retire as of September 30, 2009, or eligible upon
15
passage of this article, and for their beneficiaries, the provisions of this subsection (d) shall not
16
apply.
17
(e) All legislators and all beneficiaries of legislators who are receiving a retirement
18
allowance pursuant to the provisions of § 36-10-9.1 for a period of three (3) or more years, shall,
19
commencing January 1, 1982, receive a cost of living retirement adjustment, in addition to a
20
retirement allowance, in an amount equal to three percent (3%) of the original retirement allowance.
21
In each succeeding year thereafter during the month of January, the retirement allowance shall be
22
increased an additional three percent (3%) of the original retirement allowance, compounded
23
annually, to be continued during the lifetime of the legislator or beneficiary. For the purposes of
24
computation, credit shall be given for a full calendar year regardless of the effective date of the
25
service retirement allowance.
26
(f) The provisions of §§ 45-13-7 — 45-13-10 shall not apply to this section.
27
(g) This subsection (g) shall be effective for the period July 1, 2012, through June 30, 2015.
28
(1) Notwithstanding the prior paragraphs of this section, and subject to subsection (g)(2)
29
below, for all present and former employees, active and retired members, and beneficiaries
30
receiving any retirement, disability or death allowance or benefit of any kind, the annual benefit
31
adjustment provided in any calendar year under this section shall be equal to (A) multiplied by (B)
32
where (A) is equal to the percentage determined by subtracting five and one-half percent (5.5%)
33
(the “subtrahend”) from the Five-Year Average Investment Return of the retirement system
34
determined as of the last day of the plan year preceding the calendar year in which the adjustment

LC005039 - Page 3 of 18
1
is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent
2
(0%), and (B) is equal to the lesser of the member’s retirement allowance or the first twenty-five
3
thousand dollars ($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000)
4
amount to be indexed annually in the same percentage as determined under (g)(1)(A) above. The
5
“Five-Year Average Investment Return” shall mean the average of the investment returns of the
6
most recent five (5) plan years as determined by the retirement board. Subject to subsection (g)(2)
7
below, the benefit adjustment provided by this subsection (g)(1) shall commence upon the third
8
(3rd) anniversary of the date of retirement or the date on which the retiree reaches their Social
9
Security retirement age, whichever is later. In the event the retirement board adjusts the actuarially
10
assumed rate of return for the system, either upward or downward, the subtrahend shall be adjusted
11
either upward or downward in the same amount.
12
(2) Except as provided in subsection (g)(3), the benefit adjustments under this section for
13
any plan year shall be suspended in their entirety unless the funded ratio of the employees’
14
retirement system of Rhode Island, the judicial retirement benefits trust, and the state police
15
retirement benefits trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty
16
percent (80%) in which event the benefit adjustment will be reinstated for all members for such
17
plan year.
18
In determining whether a funding level under this subsection (g)(2) has been achieved, the
19
actuary shall calculate the funding percentage after taking into account the reinstatement of any
20
current or future benefit adjustment provided under this section.
21
(3) Notwithstanding subsection (g)(2), in each fifth plan year commencing after June 30,
22
2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five
23
plan years, a benefit adjustment shall be calculated and made in accordance with subsection (g)(1)
24
above until the funded ratio of the employees’ retirement system of Rhode Island, the judicial
25
retirement benefits trust, and the state police retirement benefits trust, calculated by the system’s
26
actuary on an aggregate basis, exceeds eighty percent (80%).
27
(4) Notwithstanding any other provision of this chapter, the provisions of this subsection
28
(g) shall become effective July 1, 2012, and shall apply to any benefit adjustment not granted on or
29
prior to June 30, 2012.
30
(h) This subsection (h) shall become effective July 1, 2015.
31
(1)(A) As soon as administratively reasonable following the enactment into law of this
32
subsection (h)(1)(A), a one-time benefit adjustment shall be provided to members and/or
33
beneficiaries of members who retired on or before June 30, 2012, in the amount of two percent
34
(2%) of the lesser of either the member’s retirement allowance or the first twenty-five thousand

LC005039 - Page 4 of 18
1
dollars ($25,000) of the member’s retirement allowance. This one-time benefit adjustment shall be
2
provided without regard to the retiree’s age or number of years since retirement.
3
(B) Notwithstanding the prior subsections of this section, for all present and former
4
employees, active and retired members, and beneficiaries receiving any retirement, disability or
5
death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar year
6
under this section for adjustments on and after January 1, 2016, and subject to subsection (h)(2)
7
below, shall be equal to (I) multiplied by (II):
8
(I) shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:
9
(i) is equal to the percentage determined by subtracting five and one-half percent (5.5%)
10
(the “subtrahend”) from the five-year average investment return of the retirement system
11
determined as of the last day of the plan year preceding the calendar year in which the adjustment
12
is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent
13
(0%). The “five-year average investment return” shall mean the average of the investment returns
14
of the most recent five (5) plan years as determined by the retirement board. In the event the
15
retirement board adjusts the actuarially assumed rate of return for the system, either upward or
16
downward, the subtrahend shall be adjusted either upward or downward in the same amount.
17
(ii) is equal to the lesser of three percent (3%) or the percentage increase in the Consumer
18
Price Index for All Urban Consumers (CPI-U) as published by the U.S. Department of Labor
19
Statistics determined as of September 30 of the prior calendar year. In no event shall the sum of (i)
20
plus (ii) exceed three and one-half percent (3.5%) or be less than zero percent (0%).
21
(II) is equal to the lesser of either the member’s retirement allowance or the first twenty-
22
five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount
23
to be indexed annually in the same percentage as determined under subsection (h)(1)(B)(I) above.
24
The benefit adjustments provided by this subsection (h)(1)(B) shall be provided to all
25
retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect,
26
and for all other retirees the benefit adjustments shall commence upon the third anniversary of the
27
date of retirement or the date on which the retiree reaches their Social Security retirement age,
28
whichever is later.
29
(2) Except for members and/or beneficiaries of members who retired on or before June 30,
30
2012, the benefit adjustments under subsection (h)(1)(B) for any plan year shall be reduced to
31
twenty-five percent (25%) of the benefit adjustment unless the funded ratio of the employees’
32
retirement system of Rhode Island, the judicial retirement benefits trust, and the state police
33
retirement benefits trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty
34
percent (80%) in which event the benefit adjustment will be reinstated for all members for such

LC005039 - Page 5 of 18
1
plan year. Effective July 1, 2024, the funded ratio of the employees’ retirement system of Rhode
2
Island, the judicial retirement benefits trust, and the state police retirement benefits trust, calculated
3
by the system’s actuary on an aggregate basis, of exceeding eighty percent (80%) for the benefit
4
adjustment to be reinstated for all members for such plan year shall be replaced with seventy-five
5
percent (75%).
6
In determining whether a funding level under this subsection (h)(2) has been achieved, the
7
actuary shall calculate the funding percentage after taking into account the reinstatement of any
8
current or future benefit adjustment provided under this section.
9
(3) Effective for members and/or beneficiaries of members who retired after June 30, 2012,
10
or on or before June 30, 2015, the dollar amount in subsection (h)(1)(B)(II) of twenty-five thousand
11
eight hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and
12
twenty-six dollars ($31,026) until the funded ratio of the employees’ retirement system of Rhode
13
Island, the judicial retirement benefits trust, and the state police retirement benefits trust, calculated
14
by the system’s actuary on an aggregate basis, exceeds eighty percent (80%). Effective July 1,
15
2024, the funded ratio of the employees’ retirement system of Rhode Island, the judicial retirement
16
benefits trust, and the state police retirement benefits trust, calculated by the system’s actuary on
17
an aggregate basis, of exceeding eighty percent (80%) shall be replaced with seventy-five percent
18
(75%).
19
(i) Effective for members and/or beneficiaries of members who have retired on or before
20
July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60)
21
days following the enactment of the legislation implementing this provision, and a second one-time
22
stipend of five hundred dollars ($500) in the same month of the following year. These stipends
23
shall be payable to all retired members or beneficiaries receiving a benefit as of the applicable
24
payment date and shall not be considered cost of living adjustments under the prior provisions of
25
this section.
26

(j)(1) Notwithstanding the provisions of subsection (h) of this section, beginning on
27
January 1, 2026, and every January 1 thereafter, in addition to the provisions of this subsection, the
28
defined benefit retirement allowance for all retired former state employees and all beneficiaries of
29
retired former state employees, excluding all retired judges and retired members of the state police,
30
shall be adjusted and computed by multiplying the retirement allowance by the percentage of
31
annual increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the
32
United States Department of Labor Bureau of Labor Statistics for the third quarter of the prior
33
calendar year. It is further provided, however, that the amount of the cost of living adjustment shall
34
be either the CPI-U or three percent (3%), whichever is less. Such adjustment shall be compounded

LC005039 - Page 6 of 18
1
into the retiree’s total retirement benefits each year. The new total retirement benefit as
2
compounded shall be the basis for the CPI calculation each subsequent year.
3

(2) The adjustment described in subsection (j)(1) of this section shall be based on:
4

(i) The retirement benefit received by a retiree on January 1, 2026; or
5

(ii) For employees not receiving benefits at the time of the effective date of this subsection,
6
upon their defined benefit retirement entitlement.
7

(3) The provisions of this subsection shall be deemed to apply prospectively only, and no
8
retroactive benefit shall be awarded.
9

(4) The provisions of subsections (j)(1) and (j)(2) of this section providing for a cost of
10
living allowance shall be covered by funds held by the employee retirement system of Rhode Island
11
and shall not modify nor increase the amount by which public employers that participate in the
12
employee retirement system of Rhode Island contribute to that system.
13

(5) The provisions of this subsection shall sunset and expire on July 1, 2035.
14
SECTION 2. Sections 16-16-23 and 16-16-40 of the General Laws in Chapter 16-16
15
entitled "Teachers’ Retirement [See Title 16 Chapter 97 — The Rhode Island Board of Education
16
Act]" are hereby amended to read as follows:
17

16-16-23. Applicability of public employees’ retirement law.
18
Except as specifically provided otherwise in this chapter,
and except for § 36-10-35(h)
all
19
provisions of chapters 8 — 10 of title 36 shall extend and apply to the persons made members of
20
the retirement system by the provisions of this chapter.
All members of the retirement system shall
21
be entitled to the benefits of § 36-10-35(h).
22

16-16-40. Additional benefits payable to retired teachers.
23
(a) All teachers and all beneficiaries of teachers receiving any service retirement or
24
ordinary or accidental disability retirement allowance pursuant to the provisions of this chapter and
25
chapter 17 of this title, on or before December 31, 1967, shall receive a cost of living retirement
26
adjustment equal to one and one-half percent (1.5%) per year of the original retirement allowance,
27
not compounded, for each year the retirement allowance has been in effect. For purposes of
28
computation credit shall be given for a full calendar year regardless of the effective date of the
29
retirement allowance. This cost of living retirement adjustment shall be added to the amount of the
30
service retirement allowance as of January 1, 1970, and payment shall begin as of July 1, 1970. An
31
additional cost of living retirement adjustment shall be added to the original retirement allowance
32
equal to three percent (3%) of the original retirement allowance on the first day of January, 1971,
33
and each year thereafter through December 31, 1980.
34
(b) All teachers and beneficiaries of teachers receiving any service retirement or ordinary

LC005039 - Page 7 of 18
1
disability retirement allowance pursuant to the provisions of this title who retired on or after January
2
1, 1968, shall, on the first day of January, next following the third (3rd) year on retirement, receive
3
a cost of living adjustment, in addition to their retirement allowance, an amount equal to three
4
percent (3%) of the original retirement allowance. In each succeeding year thereafter, on the first
5
day of January, the retirement allowance shall be increased an additional three percent (3%) of the
6
original retirement allowance, not compounded, to be continued through December 31, 1980.
7
(c)(1) Beginning on January 1, 1981, for all teachers and beneficiaries of teachers receiving
8
any service retirement and all teachers and all beneficiaries of teachers who have completed at least
9
ten (10) years of contributory service on or before July 1, 2005, pursuant to the provisions of this
10
chapter, and for all teachers and beneficiaries of teachers who receive a disability retirement
11
allowance pursuant to §§ 16-16-14 — 16-16-17, the cost of living adjustment shall be computed
12
and paid at the rate of three percent (3%) of the original retirement allowance or the retirement
13
allowance as computed in accordance with § 16-16-40.1, compounded annually from the year for
14
which the cost of living adjustment was determined to be payable by the retirement board pursuant
15
to the provisions of subsection (a) or (b) of this section. Such cost of living adjustments are available
16
to teachers who retire before October 1, 2009, or are eligible to retire as of September 30, 2009.
17
(2) The provisions of this subsection shall be deemed to apply prospectively only and no
18
retroactive payment shall be made.
19
(3) The retirement allowance of all teachers and all beneficiaries of teachers who have not
20
completed at least ten (10) years of contributory service on or before July 1, 2005, or were not
21
eligible to retire as of September 30, 2009, shall, on the month following the third anniversary date
22
of the retirement, and on the month following the anniversary date of each succeeding year be
23
adjusted and computed by multiplying the retirement allowance by three percent (3%) or the
24
percentage of increase in the Consumer Price Index for All Urban Consumers (CPI-U) as published
25
by the United States Department of Labor Statistics, determined as of September 30 of the prior
26
calendar year, whichever is less; the cost of living adjustment shall be compounded annually from
27
the year for which the cost of living adjustment was determined payable by the retirement board;
28
provided, that no adjustment shall cause any retirement allowance to be decreased from the
29
retirement allowance provided immediately before such adjustment.
30
(d) For teachers not eligible to retire in accordance with this chapter as of September 30,
31
2009, and not eligible upon passage of this article, and for their beneficiaries, the cost of living
32
adjustment described in subsection (c)(3) of this section shall only apply to the first thirty-five
33
thousand dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon
34
the third (3rd) anniversary of the date of retirement or when the retiree reaches age sixty-five (65),

LC005039 - Page 8 of 18
1
whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase annually by the
2
percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U) as published
3
by the United States Department of Labor Statistics determined as of September 30 of the prior
4
calendar year or three percent (3%), whichever is less. The first thirty-five thousand dollars
5
($35,000), as indexed, of retirement allowance shall be multiplied by the percentage of increase in
6
the Consumer Price Index for All Urban Consumers (CPI-U) as published by the United States
7
Department of Labor Statistics determined as of September 30 of the prior calendar year or three
8
percent (3%), whichever is less, on the month following the anniversary date of each succeeding
9
year. For teachers eligible to retire as of September 30, 2009, or eligible upon passage of this article,
10
and for their beneficiaries, the provisions of this subsection (d) shall not apply.
11
(e) The provisions of §§ 45-13-7 — 45-13-10 shall not apply to this section.
12
(f) This subsection (f) shall be effective for the period July 1, 2012, through June 30, 2015.
13
(1) Notwithstanding the prior paragraphs of this section, and subject to subsection (f)(2)
14
below, for all present and former teachers, active and retired teachers, and beneficiaries receiving
15
any retirement, disability or death allowance or benefit of any kind, the annual benefit adjustment
16
provided in any calendar year under this section shall be equal to (A) multiplied by (B) where (A)
17
is equal to the percentage determined by subtracting five and one-half percent (5.5%) (the
18
“subtrahend”) from the Five-Year Average Investment Return of the retirement system determined
19
as of the last day of the plan year preceding the calendar year in which the adjustment is granted,
20
said percentage not to exceed four percent (4%) and not to be less than zero percent (0%), and (B)
21
is equal to the lesser of the teacher’s retirement allowance or the first twenty-five thousand dollars
22
($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000) amount to be
23
indexed annually in the same percentage as determined under (f)(1)(A) above. The “Five-Year
24
Average Investment Return” shall mean the average of the investment returns of the most recent
25
five (5) plan years as determined by the retirement board. Subject to subsection (f)(2) below, the
26
benefit adjustment provided by this subsection (f)(1) shall commence upon the third (3rd)
27
anniversary of the date of retirement or the date on which the retiree reaches their Social Security
28
retirement age, whichever is later. In the event the retirement board adjusts the actuarially assumed
29
rate of return for the system, either upward or downward, the subtrahend shall be adjusted either
30
upward or downward in the same amount.
31
(2) Except as provided in subsection (f)(3), the benefit adjustments under this section for
32
any plan year shall be suspended in their entirety unless the funded ratio of the employees’
33
retirement system of Rhode Island, the judicial retirement benefits trust, and the state police
34
retirement benefits trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty

LC005039 - Page 9 of 18
1
percent (80%) in which event the benefit adjustment will be reinstated for all teachers for such plan
2
year.
3
In determining whether a funding level under this subsection (f)(2) has been achieved, the
4
actuary shall calculate the funding percentage after taking into account the reinstatement of any
5
current or future benefit adjustment provided under this section.
6
(3) Notwithstanding subsection (f)(2), in each fifth plan year commencing after June 30,
7
2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five
8
plan years, a benefit adjustment shall be calculated and made in accordance with subsection (f)(1)
9
above until the funded ratio of the employees’ retirement system of Rhode Island, the judicial
10
retirement benefits trust, and the state police retirement benefits trust, calculated by the system’s
11
actuary on an aggregate basis, exceeds eighty percent (80%).
12
(4) Notwithstanding any other provisions of this chapter, the provisions of this subsection
13
(f) shall become effective July 1, 2012, and shall apply to any benefit adjustments not granted on
14
or prior to June 30, 2012.
15
(g) This subsection (g) shall become effective July 1, 2015.
16
(1)(A) As soon as administratively reasonable following the enactment into law of this
17
subsection (g)(1)(A), a one-time benefit adjustment shall be provided to teachers and/or
18
beneficiaries of teachers who retired on or before June 30, 2012, in the amount of two percent (2%)
19
of the lesser of either the teacher’s retirement allowance or the first twenty-five thousand dollars
20
($25,000) of the teacher’s retirement allowance. This one-time benefit adjustment shall be provided
21
without regard to the retiree’s age or number of years since retirement.
22
(B) Notwithstanding the prior subsections of this section, for all present and former
23
teachers, active and retired teachers, and beneficiaries receiving any retirement, disability, or death
24
allowance or benefit of any kind, the annual benefit adjustment provided in any calendar year under
25
this section for adjustments on and after January 1, 2016, and subject to subsection (g)(2) below,
26
shall be equal to (I) multiplied by (II):
27
(I) shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:
28
(i) is equal to the percentage determined by subtracting five and one-half percent (5.5%)
29
(the “subtrahend”) from the five-year average investment return of the retirement system
30
determined as of the last day of the plan year preceding the calendar year in which the adjustment
31
is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent
32
(0%). The “five-year average investment return” shall mean the average of the investment returns
33
of the most recent five (5) plan years as determined by the retirement board. In the event the
34
retirement board adjusts the actuarially assumed rate of return for the system, either upward or

LC005039 - Page 10 of 18
1
downward, the subtrahend shall be adjusted either upward or downward in the same amount.
2
(ii) is equal to the lesser of three percent (3%) or the percentage increase in the Consumer
3
Price Index for All Urban Consumers (CPI-U) as published by the U.S. Department of Labor
4
Statistics determined as of September 30 of the prior calendar year.
5
In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be less
6
than (0%) percent.
7
(II) is equal to the lesser of either the teacher’s retirement allowance or the first twenty-
8
five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount
9
to be indexed annually in the same percentage as determined under subsection (g)(1)(B)(I) above.
10
The benefit adjustments provided by this subsection (g)(1)(B) shall be provided to all
11
retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect,
12
and for all other retirees the benefit adjustments shall commence upon the third anniversary of the
13
date of retirement or the date on which the retiree reaches his or her Social Security retirement age,
14
whichever is later.
15
(2) Except for teachers and/or beneficiaries of teachers who retired on or before June 30,
16
2012, the benefit adjustments under subsection (g)(1)(B) for any plan year shall be reduced to
17
twenty-five percent (25%) of the benefit adjustment unless the funded ratio of the employees’
18
retirement system of Rhode Island, the judicial retirement benefits trust, and the state police
19
retirement benefits trust, calculated by the system’s actuary on an aggregate basis, exceeds eighty
20
percent (80%) in which event the benefit adjustment will be reinstated for all teachers for such plan
21
year. Effective July 1, 2024, the funded ratio of the employees’ retirement system of Rhode Island,
22
the judicial retirement benefits trust, and the state police retirement benefits trust, calculated by the
23
system’s actuary on an aggregate basis, of exceeding eighty percent (80%) for the benefit
24
adjustment to be reinstated for all teachers for such plan year shall be replaced with seventy-five
25
percent (75%).
26
In determining whether a funding level under this subsection (g)(2) has been achieved, the
27
actuary shall calculate the funding percentage after taking into account the reinstatement of any
28
current or future benefit adjustment provided under this section.
29
(3) Effective for teachers and/or beneficiaries of teachers who retired after June 30, 2012,
30
or on or before June 30, 2015, the dollar amount in subsection (g)(1)(B)(II) of twenty-five thousand
31
eight hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and
32
twenty-six dollars ($31,026) until the funded ratio of the employees’ retirement system of Rhode
33
Island, the judicial retirement benefits trust, and the state police retirement benefits trust, calculated
34
by the system’s actuary on an aggregate basis, exceeds eighty percent (80%). Effective July 1,

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1
2024, the funded ratio of the employees’ retirement system of Rhode Island, the judicial retirement
2
benefits trust, and the state police retirement benefits trust, calculated by the system’s actuary on
3
an aggregate basis, of exceeding eighty percent (80%) shall be replaced with seventy-five percent
4
(75%).
5
(4) Effective for teachers and/or beneficiaries of teachers who have retired on or before
6
July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60)
7
days following the enactment of the legislation implementing this provision, and a second one-time
8
stipend of five hundred dollars ($500) in the same month of the following year. These stipends
9
shall be payable to all retired teachers or beneficiaries receiving a benefit as of the applicable
10
payment date and shall not be considered cost of living adjustments under the prior provisions of
11
this section.
12

(h)(1) Notwithstanding the provisions of subsection (g) of this section, beginning on
13
January 1, 2026, and every January 1 thereafter, in addition to the provisions of this subsection, the
14
defined benefit retirement allowance for all retired former teachers and all beneficiaries of retired
15
teachers shall be adjusted and computed by multiplying the retirement allowance by the percentage
16
of annual increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by
17
the United States Department of Labor Bureau of Labor Statistics for the third quarter of the prior
18
calendar year. It is further provided, however, that the cost of living adjustment shall be either the
19
CPI-U or three percent (3%), whichever is less. It is further provided, that the said adjustment shall
20
be no less than zero percent (0.0%). Such adjustment shall be compounded into the retiree’s total
21
retirement benefits each year. The new total retirement benefit as compounded shall be the basis
22
for the CPI calculation each subsequent year.
23

(2) The adjustment described in subsection (h)(1) of this section shall be based on:
24

(i) The retirement benefit received by a retiree on January 1, 2026; or
25

(ii) For employees not receiving benefits at the time of the effective date of this subsection,
26
upon their defined benefit retirement entitlement.
27

(3) The provisions of this subsection shall be deemed to apply prospectively only, and no
28
retroactive benefit shall be awarded.
29

(4) The provisions of subsections (h)(1) and (h)(2) of this section providing for a cost of
30
living allowance shall be covered by funds held by the employee retirement system of Rhode Island
31
and shall not modify nor increase the amount by which public employers that participate in the
32
employee retirement system of Rhode Island contribute to that system.
33

(5) The provisions of this subsection shall sunset and expire on July 1, 2035.
34
SECTION 3. Section 45-21-2 of the General Laws in Chapter 45-21 entitled "Retirement

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1
of Municipal Employees" is hereby amended to read as follows:
2

45-21-2. Definitions.
3
The following words and phrases as used in this chapter have the following meanings
4
unless a different meaning is plainly required by the context:
5
(1) “Accumulated contributions” means the sum of all amounts deducted from the
6
compensation of a member and credited to the member’s individual account in the members’
7
contribution reserve account.
8
(2) “Active member” means any employee of a participating municipality as defined in this
9
section for whom the retirement system is currently receiving regular contributions pursuant to §
10
45-21-41, § 45-21-41.1, or § 45-21.2-14.
11
(3) “Actuarial reserve” means the present value of all payments to be made on account of
12
any annuity, retirement allowance, or benefit, computed upon the basis of mortality tables adopted
13
by the retirement board with regular interest.
14
(4) “Beneficiary” means any person in receipt of a retirement allowance, annuity, or other
15
benefit as provided by this chapter.
16
(5) For purposes of this chapter, “domestic partner” shall be defined as a person who, prior
17
to the decedent’s death, was in an exclusive, intimate, and committed relationship with the
18
decedent, and who certifies by affidavit that their relationship met the following qualifications:
19
(i) Both partners were at least eighteen (18) years of age and were mentally competent to
20
contract;
21
(ii) Neither partner was married to anyone else;
22
(iii) Partners were not related by blood to a degree which would prohibit marriage in the
23
state of Rhode Island;
24
(iv) Partners resided together and had resided together for at least one year at the time of
25
death; and
26
(v) Partners were financially interdependent as evidenced by at least two (2) of the
27
following:
28
(A) Domestic partnership agreement or relationship contract;
29
(B) Joint mortgage or joint ownership of primary residence;
30
(C) Two (2) of: (I) Joint ownership of motor vehicle; (II) Joint checking account; (III) Joint
31
credit account; (IV) Joint lease; and/or
32
(D) The domestic partner had been designated as a beneficiary for the decedent’s will,
33
retirement contract, or life insurance.
34
(6) “Effective date of participation” means the date on which the provisions of this chapter

LC005039 - Page 13 of 18
1
have become applicable to a municipality accepting the provisions of the chapter in the manner
2
stated in § 45-21-4.
3
(7) “Employee” means any regular and permanent employee or officer of any municipality,
4
whose business time at a minimum of twenty (20) hours a week is devoted to the service of the
5
municipality, including elective officials and officials and employees of city and town housing
6
authorities. Notwithstanding the previous sentence, the term “employee,” for the purposes of this
7
chapter, does not include any person whose duties are of a casual or seasonal nature. The retirement
8
board shall decide who are employees within the meaning of this chapter, but in no case shall it
9
deem as an employee any individual who annually devotes less than twenty (20) business hours per
10
week to the service of the municipality and who receives less than the equivalent of minimum wage
11
compensation on an hourly basis for their services, except as provided in § 45-21-14.1 [repealed].
12
Casual employees mean those persons hired for an occasional period or a period of emergency to
13
perform special jobs or functions not necessarily related to the work of regular employees. Any
14
commissioner of a municipal housing authority, or any member of a part-time state board
15
commission, committee, or other authority is not deemed to be an employee within the meaning of
16
this chapter.
17
(8)(a) “Final compensation” for members
who are eligible to retire on or prior to June 30,
18
2012,
means the average annual compensation, pay, or salary of a member for services rendered
19
during the period of three (3) consecutive years within the total service of the member when the
20
average was highest, and as the term average annual compensation is further defined in § 36-8-
21
1(5)(a). For members eligible to retire on or after July 1, 2012, “final compensation” means the
22
average of the highest five (5) consecutive years of compensation within the total service when the
23
final compensation was the highest. For members eligible to and who retire on or after July 1, 2024,
24
“final compensation” means the average of the highest three (3) consecutive years of compensation
25
within the total service when the final compensation was the highest.
26
(b) For members who become eligible to retire on or after July 1, 2012, if more than one
27
half (½) of the member’s total years of service consist of years of service during which the member
28
devoted less than thirty (30) business hours per week to the service of the municipality, but the
29
member’s average compensation consists of three (3) or more years during which the member
30
devoted more than thirty (30) business hours per week to the service of a municipality, such
31
member’s average compensation shall mean the average of the highest ten (10) consecutive years
32
of compensation within the total service when the average compensation was the highest; provided
33
however, effective July 1, 2015, if such member’s average compensation as defined in subsection
34
(a) above is equal to or less than thirty-five thousand dollars ($35,000), such amount to be indexed

LC005039 - Page 14 of 18
1
annually in accordance with § 45-21-52(d)(1)(B), such member’s average compensation shall mean
2
the greater of: (i) The average of the highest ten (10) consecutive years of compensation within the
3
total service when the average compensation was the highest; or (ii) The member’s average
4
compensation as defined in subsection (a) above. To protect a member’s accrued benefit on June
5
30, 2012, under this subsection (8)(b), in no event shall a member’s average compensation be lower
6
than his or her average compensation determined as of June 30, 2012.
7
Notwithstanding the preceding provisions, in no event shall a member’s final compensation
8
be lower than the member’s final compensation determined as of June 30, 2012.
9

(c) Notwithstanding the provisions of subsections (8)(a) and (8)(b) of this section,
10
beginning on January 1, 2026, and every January 1 thereafter, the defined benefit retirement
11
allowance for all retired municipal employees who are part of the employee retirement system of
12
Rhode Island and all beneficiaries of retired municipal employees who were part of the employee
13
retirement system of Rhode Island shall be adjusted and computed by multiplying the retirement
14
allowance by the percentage of annual increase in the Consumer Price Index for all Urban
15
Consumers (CPI-U) as published by the United States Department of Labor Bureau of Labor
16
Statistics for the third quarter of the prior calendar year. It is further provided, however, that the
17
amount of the cost of living adjustment shall be either the CPI-U or three percent (3%), whichever
18
is less. It is further provided, that the said adjustment shall be no less than zero percent (0.0%).
19
Such adjustment shall be compounded into the retiree’s total retirement benefits each year. The
20
new total retirement benefit as compounded shall be the basis for the CPI calculation each
21
subsequent year.
22

(d) The adjustment described in subsection (8)(c) of this section shall be based on:
23

(1) The retirement benefit received by a retiree on January 1, 2026; or
24

(2) For employees not receiving benefits at the time of the effective date of this subsection,
25
upon their defined benefit retirement entitlement.
26

(e) The provisions of subsection (8)(c) and (8)(d) of this section providing for a cost of
27
living allowance shall be covered by funds held by the employee retirement system of Rhode Island
28
and shall not modify nor increase the amount by which public employers that participate in the
29
employee retirement system of Rhode Island contribute to that system. The provisions of this
30
section shall sunset and expire on July 1, 2035.
31

(f) The provisions of this subsection shall be deemed to apply prospectively only, and no
32
retroactive benefit shall be awarded.
33
(9) “Fiscal year” means the period beginning on July 1 in any year and ending on June 30
34
of the next succeeding year.

LC005039 - Page 15 of 18
1
(10) “Full actuarial costs” or “full actuarial value” mean the lump sum payable by a
2
member claiming service credit for certain employment for which payment is required, which is
3
determined according to the age of the member and their annual rate of compensation at the time
4
he or she applies for service credit, and which is expressed as a rate percent of the annual rate of
5
compensation to be multiplied by the number of years for which the member claims the service
6
credit, as prescribed in a schedule adopted by the retirement board, from time to time, on the basis
7
of computation by the actuary. Except as provided in §§ 16-16-7.1, 36-5-3, 36-9-31, 36-10-10.4,
8
and 45-21-53: (i) All service credit purchases requested after June 16, 2009, and prior to July 1,
9
2012, shall be at full actuarial value; and (ii) All service credit purchases requested after June 30,
10
2012, shall be at full actuarial value which shall be determined using the system’s assumed
11
investment rate of return minus one percent (1%).
12
(11) “Governing body” means any and all bodies empowered to appropriate monies for,
13
and administer the operation of, the units as defined in subdivision (13) of this section.
14
(12) “Member” means any person included in the membership of the retirement system as
15
provided in § 45-21-8.
16
(13) “Municipality” means any town or city in the state of Rhode Island, any city or town
17
housing authority, fire, water, sewer district, regional school district, public building authority as
18
established by chapter 14 of title 37 [repealed], or any other municipal financed agency to which
19
the retirement board has approved admission in the retirement system.
20
(14) “Participating municipality” means any municipality which has accepted this chapter,
21
as provided in § 45-21-4.
22
(15) “Prior service” means service as a member rendered before the effective date of
23
participation as defined in this section, certified on the member’s prior service certificate, and
24
allowable as provided in § 45-21-15.
25
(16) “Regular interest” means interest at the assumed investment rate of return,
26
compounded annually, as may be prescribed from time to time by the retirement board.
27
(17) “Retirement allowance” or “annuity” means the amounts paid to any member of the
28
municipal employees’ retirement system of the state of Rhode Island, or a survivor of the member,
29
as provided in this chapter. All retirement allowances or annuities shall be paid in equal monthly
30
installments for life, unless otherwise specifically provided.
31
(18) “Retirement board” or “board” means the state retirement board created by chapter 8
32
of title 36.
33
(19) “Retirement system” means the “municipal employees’ retirement system of the state
34
of Rhode Island” as defined in § 45-21-32.

LC005039 - Page 16 of 18
1
(20) “Service” means service as an employee of a municipality of the state of Rhode Island
2
as defined in subdivision (7).
3
(21) “Total service” means prior service as defined in subdivision (15) plus service
4
rendered as a member on or after the effective date of participation.
5
(22) Any term not specifically defined in this chapter and specifically defined in chapters
6
8 through 10 of title 36 shall have the same definition as set forth in chapters 8 through 10 of title
7
36.
8
SECTION 4. This act shall take effect upon passage.
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LC005039 - Page 17 of 18
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO PUBLIC OFFICERS AND EMPLOYEES -- RETIREMENT SYSTEM --
CONTRIBUTIONS AND BENEFITS
***
1
This act would provide that all public officers and employees, teacher retirees and
2
municipal employees, in addition to their defined benefit retirement allowance, receive cost of
3
living adjustments of up to three percent (3%) but in no event, zero percent (0%) and that the
4
adjustment be compounded into the retiree’s total retirement benefits each year. The benefits shall
5
be based on the retirement benefit received on January 1, 2026, or, if not receiving benefits at the
6
time of the passage of this act, then upon their defined benefit retirement entitlement. These benefits
7
shall be prospective only and this act shall not modify or increase any contribution by any employee
8
into the retirement system.
9
This act would take effect upon passage.
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LC005039 - Page 18 of 18